* Omron jumps after saying it will buy U.S.-based robot maker
* Regional banks lower after brokerage starts coverage at 'underperform'
By Ayai Tomisawa
TOKYO, Sept 17 (Reuters) - Japan's Nikkei share average rose for a third day to its highest in a more than a week high on Thursday after Wall Street gained on the back of strong oil prices, although investors remain cautious ahead of the U.S. Federal Reserve's decision on interest rates.
The Nikkei .N225 gained 1.4 percent to 18,432.63 in midmorning trade.
Analysts said that trading volume may be subdued as investors do not want to take large positions before the Fed decision is known.
"No one wants to be left behind if the Fed announces something unexpected," said Takuya Takahashi, an analyst at Daiwa Securities.
The Fed is due to announce a decision later in the day to either end or extend seven years of near-zero interest rates.
Traders also said that while the market is nervous about the timing of the U.S. rate hike, it is widely believed that even if the Fed raises rates soon, the frequency of subsequent rate hikes will be modest.
"The market is prepared for the Fed to raise rates at some point. The thing to watch is rather how aggressive the pace of rate increases will be, and I don't think the market is overly concerned about that," said Hiroaki Mino, director of investment information department at Mizuho Securities.
Bucking the strengthening trend, regional banks declined after Credit Suisse (SIX: CSGN ) started coverage of Fukuoka Financial Group 8354.T and Shizuoka Bank 8355.T > at 'underperform'. They fell 2.5 percent and 2.8 percent, respectively.
The brokerage cited concerns over sustaining funding for Fukuoka Financial, while it cited an overvalued stock price for Shizuoka Bank and its need to improve return on equity.
Separately, foreign investors sold a net 1.4201 trillion yen in Japanese stocks last week, the largest ever, according to data compiled by the Finance Ministry.
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